Question 1

Muriel's income elasticity of demand for football tickets is 1.5. All else equal, this means that if her income increases by 20 percent, she will buy

Accepted Answer

A)  150 percent more football tickets. 
B)  50 percent more football tickets. 
C)  30 percent more football tickets. 
D)  20 percent more football tickets. 
A)  150 percent more football tickets. 
B)  50 percent more football tickets. 
C)  30 percent more football tickets. 
D)  20 percent more football tickets.

Question 2

A 10 percent increase in the price of sugar reduces sugar consumption by about 5 percent. The increase causes households to

Accepted Answer

A)  spend more on sugar. 
B)  spend less on sugar. 
C)  spend the same on sugar. 
D)  consume more goods like coffee and tea that are complements of sugar. 
A)  spend more on sugar. 
B)  spend less on sugar. 
C)  spend the same on sugar. 
D)  consume more goods like coffee and tea that are complements of sugar.

Question 3

In the mythical nation of Oz, gasoline used to sell for $1 a gallon, and the natives purchased 100,000 gallons a week. Four years ago, the price rose to $3 a gallon, and the natives reduced their quantity demanded to 90,000 gallons a week. Calculate the price elasticity for this change. Today, gas again sells for $1 a gallon in Oz, but the natives are only buying 70,000 gallons a week. What gives?

Accepted Answer

Four years ago, the initial price increa

Question 4

The market demand for an item is

Accepted Answer

A)  the sum of individual demands. 
B)  steeper for any given price change than the individual demand curves. 
C)  independent of the number of individuals in the market. 
D)  determined by dividing the quantity demanded by each individual by the number of individuals in the market. 
A)  the sum of individual demands. 
B)  steeper for any given price change than the individual demand curves. 
C)  independent of the number of individuals in the market. 
D)  determined by dividing the quantity demanded by each individual by the number of individuals in the market.

Question 5

A local restaurant offers an "all you can eat" ribs special. If a person pays $11.95, she can eat as many servings as she desires at no additional cost. Can you infer anything about her marginal utility from observing her eating behavior?

Accepted Answer

Since the marginal cost of consuming an

Question 6

If a 50 percent increase in the price of hula hoops led to a 10 percent reduction in the quantity of hula hoops purchased, the price elasticity of demand is

Accepted Answer

A)  5 and the demand for hula hoops is elastic. 
B)  0.2 and the demand for hula hoops is elastic. 
C)  5 and the demand for hula hoops is inelastic. 
D)  0.2 and the demand for hula hoops is inelastic. 
A)  5 and the demand for hula hoops is elastic. 
B)  0.2 and the demand for hula hoops is elastic. 
C)  5 and the demand for hula hoops is inelastic. 
D)  0.2 and the demand for hula hoops is inelastic.

Question 7

Table 7-1
  
-Refer to Table 7-1. When the price of the good is $1.00, the quantity demanded in this market would be

Accepted Answer

A)  42 units. 
B)  31 units. 
C)  24 units. 
D)  14 units. 
A)  42 units. 
B)  31 units. 
C)  24 units. 
D)  14 units.

Question 8

Figure 7-2
  
-Figure 7-2 depicts a demand curve with a price elasticity that is

Accepted Answer

A)  perfectly elastic, implying that as much as can be supplied will be purchased at the market price. 
B)  relatively inelastic, implying that a percent increase in price results in a smaller percent reduction in sales. 
C)  unitary, implying that a percent change in price leads to an equal percent change in quantity demanded. 
D)  perfectly inelastic, implying that the same amount will be purchased regardless of the price of the good. 
A)  perfectly elastic, implying that as much as can be supplied will be purchased at the market price. 
B)  relatively inelastic, implying that a percent increase in price results in a smaller percent reduction in sales. 
C)  unitary, implying that a percent change in price leads to an equal percent change in quantity demanded. 
D)  perfectly inelastic, implying that the same amount will be purchased regardless of the price of the good.

Question 9

Sally is on her college golf team and only uses Titleist golf balls. She states: "I don't care what the price is, I will only buy Titleists." Is this a believable assertion?

Accepted Answer

Probably not. While another golf ball mi

Question 10

If the price of apples decreases by 2 percent and causes apple consumption to increase by 4 percent, the price elasticity of demand is ____, indicating the demand is ____.

Accepted Answer

A)  2; elastic 
B)  2; inelastic 
C)  0.5; elastic 
D)  0.5; inelastic 
A)  2; elastic 
B)  2; inelastic 
C)  0.5; elastic 
D)  0.5; inelastic

Question 11

The marginal value of a commodity to a consumer

Accepted Answer

A)  increases as more of the good is consumed. 
B)  is exactly equal to price for all units purchased by the consumer. 
C)  is measured by the height of the individual consumer's demand curve. 
D)  is equal to the area above the price and below the individual consumer's demand curve. 
A)  increases as more of the good is consumed. 
B)  is exactly equal to price for all units purchased by the consumer. 
C)  is measured by the height of the individual consumer's demand curve. 
D)  is equal to the area above the price and below the individual consumer's demand curve.

Question 12

"Because of the unseasonably cold weather, Florida orange growers expect (1) fewer bushels of oranges to be harvested, (2) a higher market price for oranges, and (3) larger total revenues from this year's crop." This statement would most likely be correct if the

Accepted Answer

A)  demand for Florida oranges was elastic. 
B)  demand for Florida oranges was unitary elastic. 
C)  demand for Florida oranges was inelastic. 
D)  income elasticity of Florida oranges was negative. 
A)  demand for Florida oranges was elastic. 
B)  demand for Florida oranges was unitary elastic. 
C)  demand for Florida oranges was inelastic. 
D)  income elasticity of Florida oranges was negative.

Question 13

Which of the following would be the best example of consumer surplus?

Accepted Answer

A)  Jane does not get cell-phone service because she feels that it is worth less than the $30 a month fee. 
B)  Sam pays $8 for a haircut that is worth $10 to him. 
C)  Ralph buys a house for $104,000, the maximum amount that he would be willing to pay for it. 
D)  Sue purchases a book for $20 and uses a credit card to pay for it. 
A)  Jane does not get cell-phone service because she feels that it is worth less than the $30 a month fee. 
B)  Sam pays $8 for a haircut that is worth $10 to him. 
C)  Ralph buys a house for $104,000, the maximum amount that he would be willing to pay for it. 
D)  Sue purchases a book for $20 and uses a credit card to pay for it.

Question 14

If Mr. Smith thinks the last dollar spent on shirts yields more satisfaction than the last dollar spent on cola, and Smith is a utility-maximizing consumer, he should

Accepted Answer

A)  decrease his spending on cola. 
B)  decrease his spending on cola and increase his spending on shirts. 
C)  increase his spending on shirts. 
D)  increase his spending on cola and decrease his spending on shirts. 
A)  decrease his spending on cola. 
B)  decrease his spending on cola and increase his spending on shirts. 
C)  increase his spending on shirts. 
D)  increase his spending on cola and decrease his spending on shirts.

Question 15

"I'm tired of eating cold pizza for breakfast. Today I'm going to the make some oatmeal instead." This statement most clearly reflects the

Accepted Answer

A)  law of increasing returns to scale. 
B)  second law of demand. 
C)  law of diminishing marginal utility. 
D)  law of comparative advantage. 
A)  law of increasing returns to scale. 
B)  second law of demand. 
C)  law of diminishing marginal utility. 
D)  law of comparative advantage.

Question 16

The price elasticity of demand for gasoline measures the

Accepted Answer

A)  responsiveness of gasoline producers to changes in the quality of gasoline. 
B)  responsiveness of customers to changes in the price of gasoline. 
C)  responsiveness of consumer preferences to changes in the quality of gasoline. 
D)  both a and c above. 
A)  responsiveness of gasoline producers to changes in the quality of gasoline. 
B)  responsiveness of customers to changes in the price of gasoline. 
C)  responsiveness of consumer preferences to changes in the quality of gasoline. 
D)  both a and c above.

Question 17

All things equal, the price elasticity of supply

Accepted Answer

A)  will be smaller in the short run than in the long run. 
B)  will be smaller in the long run than in the short run. 
C)  is the same for the short run and the long run. 
D)  approaches zero in the long run. 
A)  will be smaller in the short run than in the long run. 
B)  will be smaller in the long run than in the short run. 
C)  is the same for the short run and the long run. 
D)  approaches zero in the long run.

Question 18

Figure 7-10
  
-Figure 7-10 depicts a demand curve with a price elasticity that is

Accepted Answer

A)  unitary, implying that a percent change in price leads to an equal percent change in quantity demanded. 
B)  perfectly inelastic, implying that the same amount will be purchased regardless of the price of the good. 
C)  equal to zero. 
D)  both b and c. 
A)  unitary, implying that a percent change in price leads to an equal percent change in quantity demanded. 
B)  perfectly inelastic, implying that the same amount will be purchased regardless of the price of the good. 
C)  equal to zero. 
D)  both b and c.

Question 19

Sally recently got a 15 percent raise. She now purchases 7.5 percent more steak dinners. Sally's income elasticity for steak dinners is

Accepted Answer

A)  0.5. 
B)  0.75. 
C)  1.5 
D)  2. 
A)  0.5. 
B)  0.75. 
C)  1.5 
D)  2.

Question 20

As the period for firms to expand output is lengthened, the elasticity of the market supply curve will

Accepted Answer

A)  approach zero. 
B)  increase. 
C)  decrease. 
D)  remain the same since time does not affect the elasticity of market supply. 
A)  approach zero. 
B)  increase. 
C)  decrease. 
D)  remain the same since time does not affect the elasticity of market supply.

Exam 20: Consumer Choice and Elasticity

Muriel's income elasticity of demand for football tickets is 1.5. All else equal, this means that if her income increases by 20 percent, she will buy

A 10 percent increase in the price of sugar reduces sugar consumption by about 5 percent. The increase causes households to

The market demand for an item is

A local restaurant offers an "all you can eat" ribs special. If a person pays $11.95, she can eat as many servings as she desires at no additional cost. Can you infer anything about her marginal utility from observing her eating behavior?

If a 50 percent increase in the price of hula hoops led to a 10 percent reduction in the quantity of hula hoops purchased, the price elasticity of demand is

Table 7-1 -Refer to Table 7-1. When the price of the good is $1.00, the quantity demanded in this market would be

Figure 7-2 -Figure 7-2 depicts a demand curve with a price elasticity that is

Sally is on her college golf team and only uses Titleist golf balls. She states: "I don't care what the price is, I will only buy Titleists." Is this a believable assertion?

If the price of apples decreases by 2 percent and causes apple consumption to increase by 4 percent, the price elasticity of demand is ____, indicating the demand is ____.

The marginal value of a commodity to a consumer

"Because of the unseasonably cold weather, Florida orange growers expect (1) fewer bushels of oranges to be harvested, (2) a higher market price for oranges, and (3) larger total revenues from this year's crop." This statement would most likely be correct if the

Which of the following would be the best example of consumer surplus?

If Mr. Smith thinks the last dollar spent on shirts yields more satisfaction than the last dollar spent on cola, and Smith is a utility-maximizing consumer, he should

"I'm tired of eating cold pizza for breakfast. Today I'm going to the make some oatmeal instead." This statement most clearly reflects the

The price elasticity of demand for gasoline measures the

All things equal, the price elasticity of supply

Figure 7-10 -Figure 7-10 depicts a demand curve with a price elasticity that is

Sally recently got a 15 percent raise. She now purchases 7.5 percent more steak dinners. Sally's income elasticity for steak dinners is

As the period for firms to expand output is lengthened, the elasticity of the market supply curve will

The Economic Approach

A : Some Tools of the Economist

B : Some Tools of the Economist

A : Supply, Demand, and the Market Process

B : Supply, Demand, and the Market Process

A : Supply and Demand: Applications and Extensions

B : Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

A : Taking the Nations Economic Pulse

B : Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

A : an Introduction to Basic Macroeconomic Markets

B : an Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, Incentives, and Secondary Effects

A : Money and the Banking System

B : Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

A : Costs and the Supply of Goods

B : Costs and the Supply of Goods

A : Price Takers and the Competitive Process

B : Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A : Price-Searcher Markets With High Entry Barriers

B : Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Special Topic 1 : Government Spending and Taxation

Special Topic 2 : The Economics of Social Security

Special Topic 3 : The Stock Market: Its Function, Performance, and Potential as an Investment Opportunity

Special Topic 4 : Great Debates in Economics: Keynes Versus Hayek

Special Topic 5 : The Crisis of 2008: Causes and Lessons for the Future

Special Topic 6 : Lessons from the Great Depression

Special Topic 7 : Lessons from Japan and Canada

Special Topic 8 : The Federal Budget and the National Debt

Special Topic 9 : The Economics of Healthcare

Special Topic 10 : Education: Problems and Performance

Special Topic 11 : Earnings Differences Between Men and Women

Special Topic 12 : Do Labor Unions Increase the Wages of Workers?

Special Topic 13 : The Question of Resource Exhaustion

Special Topic 14 : Difficult Environmental Cases and the Role of Government

Filters

If the price of apples decreases by 2 percent and causes apple consumption to increase by 4 percent, the price elasticity of demand is , indicating the demand is .